Foreign investors keep wait-and-see attitude

HCMC – A well-known foreign fund manager asserted on Thursday that foreign investors were not investing in Vietnam’s equity market now and would maintain a wait-and-see attitude until the macro economy stabilized next year as expected.

Don Lam, chief executive officer of VinaCapital, said at the foreign fund manager’s annual meeting in HCMC on Thursday that “investors will pour funds into Vietnam next year provided that the macroeconomic stability is achieved.” He, however, said that investors still showed keen interest in Vietnam.

Vietnam’s economy is less appealing to investors now due to its slower economic growth, increasing bad debt, and a banking sector in need of restructuring, so foreign investors expect that next year would be a better time, VinaCapital said.

The bright spot in Vietnam is that the price-earning ratio in the local equity market is fairly low compared to other regional markets, attracting investors’ attention, Don Lam said. Vietnam’s P/E ratio as of end-August was 9.9 compared to 12.8 in Thailand, 14.6 in the Philippines, and 14.8 in Malaysia.

VinaCapital currently manages four investment funds, including three major funds namely VinaCapital Vietnam Opportunity Fund (VOF), VinaLand Ltd, and Vietnam Infrastructure Ltd. Except the last-named fund that invests in infrastructure, the other two are faring pretty well.

Andy Ho, managing director of VinaCapital and head of investment at the company, said the infrastructure fund’s assets have shrunk as the stock market has declined over the past years. This fund has invested over US$350 million in Vietnam, but its value has now fallen to over US$200 million.

VinaCapital is now trying to divest investments from problematic projects to pay back to investors.

Andy Ho said this fund was the worst performer among those managed by VinaCapital. Still, the company was seeking to increase the fund’s net assets value by 30% by acquiring blue-chips as well as other stocks with low P/E ratios.

Meanwhile, VOF had its net assets value as of September 30 at US$725.3 million, increasing by nearly 150% compared to 2003 when the fund was established.

VOF has a wide portfolio under its management, including bonds, debts of listed and public firms, and investments in private enterprises. In the coming time, VOF will continue acquiring stocks, especially low-priced securities with high potential, Andy Ho said.

Meanwhile, for the fund VinaLand Ltd. that invests in real estate, Don Lam said it would continue investments into existing property projects, not fresh ones. The fund as of September 30 had net assets value of US$540 million, with investments in 36 projects ranging from hotels and resorts to trade centers, housing and urban complexes.

The two-day VinaCapital investment conference wrapped up on Thursday, with 75 investors taking part, up from 50 at last year’s event.